Contract Management
When procuring goods or services for a project, contracts are important. They assure that there is a common understanding of the requirements to be delivered as well as how and how much the vendor will be paid. Contracts are legally binding agreements between the buyer and seller.
Projects, Programs, and Portfolios
The basic principles of contract law are the same regardless of how the work is managed, i.e. whether it is constituted as a project, programme, or portfolio.
Smaller, non-complex projects or work that is performed entirely using internal resources may have no contracts at all. For more complex situations, internal relationships may be defined using service level agreements (SLAs) between an operational department and the project, programme, or portfolio. These SLAs may adopt many of the principles of a contract.
As the complexity of the work increases, the P3 manager will need different levels of support in the creation and maintenance of contracts. In many situations procurement specialists will be competent to write and maintain contract documentation.
Where the work includes unusual or complex legal issues contract lawyers may be required.
As the scale and complexity of the work develops, coordination will be needed between multiple contracts. At programme or portfolio level the work will often be best served by framework contracts with suppliers that cover multiple projects rather than having separately negotiated contracts for project or work package.
In programmes, portfolios, and large projects where there are multiple contracts, the P3 manager must understand the inter-dependencies between them. The actions of one supplier may adversely affect another leading to a contractual dispute. All inter-dependencies should be considered and the contracts drafted accordingly.